Bridgeford Flying Services: A Vintage Napa Valley FBO You ... - NATA

President’s Message
Continued from page 7
make a sale. Aircraft charter prices, for example, in
some markets are so obviously below costs that it
reminds me of those 70 percent-off plane ticket fire
sales that appear just before every airline bankruptcy
announcement. In addition, airlines are notoriously
slow in reducing surplus capacity, in part
because the bankruptcy laws allow weak airlines
to survive long after they’ve failed in the marketplace.
Weak minimum standards affect our industry
the same way. We need to make sure that airports
aren’t urging too many FBOs to put out a shingle
when the local market isn’t big enough to support
them all.
Perhaps the airlines’ most obvious waste of time
and money has been their User Fee campaign in
Washington. Millions of dollars were spent on inane
TV ads, while high-priced airline lobbyists wasted
valuable face time with top politicians on an issue
that, in retrospect, was the least of their worries.
And as the User Fee battle raged over the past four
years, the airlines lost allies left and right, from
ATC controllers to big corporations (with flight
departments) that bought millions of airline tickets
but also wanted to fly private aircraft without
airline-dictated new user fees.
But as we watch airlines struggling to survive, the
central question (for them and us) is how to control
costs in a crisis. For the airlines, that means primarily
fuel and labor. Labor costs, including salaries,
benefits, and pensions, were unfettered for decades
as airline executives and complicit accounting standards
allowed the real price tag of union contracts
to be hidden in footnotes on income statements,
inflating airline profits (as well as the stock pricelinked
option packages) and disguising what would
eventually prove to be fatal liabilities. Bankruptcy
let airlines nullify labor agreements, but their workers
blamed only management and ever since the
“friendly” labor skies have disappeared. Both sides,
perhaps, should blame the accountants—or the
regulations that permitted such chicanery.
The Challenge of Fuel Pricing
Fuel costs, for the airlines and for everyone else,
are far more problematic. The challenge here,
other than reducing fuel use, waste, and cost, is to
raise prices in step with rising costs without losing
customers. Every NATA member faces the same
challenge, and some will surely repeat the mistakes
of the airlines. The winners will learn to stay ahead
of the pack, investing in the latest price data, using
it wisely, and adjusting prices and margins to
optimize net revenue. There is, for every product
or service, a price point that produces optimum
revenue. Like trying to find the perfect mixture of
air and gas for peak power in an airplane, it takes
a wise and experienced pilot (or a good computer)
to pick the right number. The airlines, individually
I suspect, know how to raise prices to offset fuel
costs. But as an industry, they have failed to keep
themselves profitable. In the long run, that can
only be fatal.
Keeping your company healthy in this dynamic
aviation economy means learning these five airline
lessons and more. So, the next time you’re stuck
in ORD or DFW waiting for your flight to arrive or
fuming in a crowded plane stranded on the tarmac
because there isn’t an open gate, take a moment
to consider the joys of running an airline and then
thank them for all that they’ve taught us. They may
have lost billions of dollars, but what you and I can
learn from them—that’s priceless!
8 Aviation Business Journal | 2 nd Quarter 2008